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tv   Trending Business  Bloomberg  September 29, 2016 9:00pm-10:01pm EDT

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♪ it is a happy friday, the 30th of september. i am haidi lun. this is "trending business". ♪ angie: we will be live in beijing and tokyo, but first, here is what we are watching, market slumping, weighed down by concerns over central banks, traders worried about deutsche bank and criticism for wells fargo and commerzbank. mixed messages from japan, employment up, prices down, but there is good news from the factory floor. a seven decade journey to an end
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four other is he currencies, the yuan joins the imf. the china and hong kong markets get underway and 30 minutes, but singapore, taiwan, and malaysia are online. juliette: it has unraveled. seen negative sentiment flowing through from wall street. it is all and the red at the open and asia. the asx 200 down 1% after gaining for two consecutive sessions. falling, down almost 1% as well. the nikkei losing 1.6%. we had some industrial data out of japan showing that industrial
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output rose 1.5% month on month in august. that beat as to men's. not to mention the boj statement toing that the boj will try look at the yield curve control at every meeting they have. still, japan consumer prices fell for a sixth consecutive month. all sectors in the red right now. financials leading declines, falling more than 1%, 2.4%. this is despite the fact that the yen has been weakening. it has seen its longest losing streak in almost a month there, losing ground now for a fourth consecutive session. we had some boost for the yen after we heard that news from the financial sector in the u.s., concerns over deutsche demand for safe
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havens, but now weakening slightly and continuing the downward trend. also that day to jump out of japan. we are taking a look through these numbers. inflation still a long way from the boj target. still, we are a long way from that right now. sixther prices fell for a straight month. withown 0.5%, in line estimates. also fill 0.5% year on year, more than expected. inflation facing headwinds from a strong yen and lower oil prices. gains have heard corporate
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profits and push down import prices, making it harder to generate inflation. other figures include industrial production, rising 1.5% month on month, a modest gain. predicted aad possible bounce and august after a decline in july, but fundamental issues still remain, strong yen, sagging demand in asia, all these issues dragging on manufacturing. fell 4.6%spending year on year against estimates of a drop of 2.1%. the last time household spending rose was in february. there is weak consumer confidence. numbers,jobless unemployment rate at 3.1 cent %.rending business lower unemployment tends to lead to higher wages.
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is wage growth, and companies have decent cash hordes but unwilling to boost wages. the boj reports show household incomes and households holding on to cash rather than spending or investing. ,hat ever that boj is doing it's unprecedented monetary stimulus is still struggling to change the behavior of households. it suggests that japan's economy is still struggling to fully overcome deflation and achieve growth. of thegiving us more lift into their thinking, the boj releasing a summary of opinions from the less controversial meeting. >> at the last meeting, some of the technical issues, .ntroducing qqe cardiff tot was in
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ensure stability and prevent the economy from returning to deflation. it also said that boj did not jgb yields this low for long. that and some key release later today at 4:00 p.m. hong kong time. the boj releasing its monthly schedule for bond buying, the first since introducing qqe. people will be watching it to see what the boj was to do with the yields. haidi: more questions than answers at this stage. let's take a look at some other stories we are tracking. concerns over systemic risks and european banks, deutsche bank again? juliette: europe's banking woes continue.
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10 hedge funds moving to reduce financial exposure to deutsche bank. an inside document obtained by bloomberg news shows the funds which use the bank's prime brokers service moved part of their listed derivative holdings to other firms. partners., millennium deutsche bank new york listed shares fell 9% to a record low thursday. it's not just deutsche bank worrying investors. ceo faced a grilling in washington over a scandal involving unauthorized accounts. commerzbank also struggling, cutting one in five employees, and we will be speaking to the cfo later today. agreeing to invest $6.9 billion
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in a high-speed rail project in its first venture into fosun will raise equity to build the link. fo the first private company tosun own a bigger stake than the government -- it makes companye first private to own a bigger stake than the government. modernizeng drive to the transportation network has lured investors into a sector that up to now has been controlled by the state. indonesiaffices in have been rated over allegations of unpaid taxes. it hasernment says that been visited many times in the past two weeks with officers taking meetings with senior managers after the company refused a tax audit.
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google says it has paid all all applicable taxes and is cooperating with authorities. president is pushing google and other internet companies to pay more taxes. he is under pressure to boost with the $17 billion in shortfall. in april, facebook and google were warned that their websites could be blocked if they failed to meet the country's tax obligations. haidi: thanks. china's currency completes a seven decade long journey, joining the imf global elite and gaining a greater role on the world stage. tom mackenzie has more on this milestone. we know it is symbolic, but what does it mean for china? is seene in beijing, it as validation of their attempts
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to grow the economy and open up the market here and get the yuan to challenge the u.s. dollar. it will join that imf basket of currencies. ofwill have a weighting 10.9% versus 41.7% for the u.s. dollar, and a number of benefits could accrue to china. we might see central banks and fund managers moving in to buy up chinese estimates. one as to and has that at went over five years. it could see greater demand for onshore bonds and yields on sovereign debt come off, making it cheaper for the chinese government to borrow money. hovering over this is the suspicion amongst many that that the boc and the authorities manipulate the currency here, and many analysts say that as long as that continues, this will not be a reserve currency. if you look at how much of the yuan is use globally between
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china and the u.s. and trade, it is used for 2.4% of payments, so tiny usage, a number of big hurdles the currency needs to get over before this really becomes a reserve currency. so many doubts remain, but are there any lessons china could learn from japan when it comes to this effort to internationalize its currency? yes, lessons a can learn from its rival and how not to do it, because you look back a few decades, japan was in a similar situation, closed borders, close capital accounts, and it wanted to challenge the u.s. dollar. it got to the point in 1991 where the yen made up a .5% of reserves. look now, it makes up for percent compared to 64% for the u.s. dollar. that is because japan's move then happened at the same time
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that bubbles burst, so that is something that china could watch out for. economy,a bigger of 18% of world output, far more than japan ever did, and its weight of 10.9% in a basket is higher than both the yen and the pound, but there are a number of significant hurdles that the government will need to overcome and navigate before the yuan s to knit at the heels of the u.s. dollar as a serious reserve currency. haidi: a work in progress there. thank you for that. will china play by the rules once the yuan gets that international seal of approval? we will focus on that next. this is bloomberg. ♪
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china's currency joins
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the global elite on saturday, becoming one of five global reserve currency is alongside the dollar, the yen, the pound, and the euro. dominic schneider joins me now. how much does it matter? >> in the short run, it does not matter. the most important thing is that the currency is more broadly accepted. we should see more foreign investors buying chinese assets, and that is an important step. being part of that global basket opens the door to to assets being held in china over a long time. too simplistic to think about the downside , expectingn the yuan them to intensify after the conclusion. >> people by sir currencies
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because they see value. if you are part of a basket or not, but they are looking more shaky than others. clearly being part of that ev statusves you more of a where assets in renminbi can be held over a longer time. here isrtant factor two-way flows, and that is what is lacking. that means china opens up for foreigners. we still have a long way to go. haidi: do you see value in the yuan? what is your call? >> we are quite negative on the renminbi. we will see dollar-yen heading towards seven. quite weakened tremendously and trade weighted terms already. if you look at some of the moves here, we are closing in on all
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the adjustments. if u.s. we how much adjustment we have done, i would say 70% behind us, just 30% to go, so more weakness too, as the dollar strengthens broadly, but i could imagine we could see a taught -- a top. haidi: if you assume a week or dollar environment, but we spoke to mr. yen, and he sees a going to 90, maybe 85 next year. are you that concerned about it? >> know, we are in the other camp. we think the yen will week in out of the fact that monetary policy between the u.s. and japan will diverge. soectations are pretty low, if the economy does well in the u.s., we will see to rate hikes next year, that will give broad dollar strength. on the other side, you'll see
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boj embarking on some form of quantitative easing. you will see those monetary policy conditions. that the it, i doubt japanese economy can really handle another big run in currency strength. haidi: we spoke when we had that taper tantrum. do you expect a repeat of what happened last time, the triple r look ates? >> if you fed normalizing monetary policy, historically that is good news. the reality is that if we look back historically, asian currencies do well because the underlying economic story is improving. what is hampering that story is the fact that we have built a too much leverage. where do i stand with regards to asian currencies towards a december rate hike? i with think the asian currencies will weekend, but that move will not be a move
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with a lot of conviction, so some weakness in the single digits. i think that can be expected towards the end of the year, but that is probably it with regard to weakness. haidi: how much upside risk is there for the aussie? is there a concern were going to see a markedly strong australian dollar? >> we still have challenges when it comes to australia. the non-mining investment showed signs of life but is still not strong enough. the mining site is not doing very well. i think you still have a challenge in terms of economic activity with regards to australia, so i can't see why the austrian dollars should really rise dramatically. we do still call for a broad u.s. dollar strength, so from that side, i am not inclined to see the aussie dollar going up. on top of it, some commodities are pointingtralia
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to the down than the upside. that is bad news. haidi: it looks like the rally is unraveling in a ship. we might have overdone the exuberance when it comes to that opec deal out of of algiers. was a surprise. everybody thought there was going to be no deal. it looks like they have some form of agreement. the devil lies in the details. we are deceived voices from some beingies like iraq not happy, because most of the burden will be cared by saudi arabia, iraq, and other gulf countries. it is still not a clear-cut deal. the other fact we have to take into consideration is that the marginal supplier is not saudi arabia. there are also the shale guys. you got too much, shale will come back.
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still a lot of uncertainty with regards to that deal, and i think that will be reflected in the oil price, so not really positive, but when investors can do right now given the uncertainty, i would not chase the oil price higher, but i would probably sell volatility. and keeping one eye on the u.s. shale guys. have a good weekend. ubsnic schneider from wealth management. the latest business flash headlines. ag bank has been asked to address deficiencies and money laundering. a was suedg year, ank was sued.
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coming up next, china's growing problem of unpaid bills. find out how bad things are getting, next. this is bloomberg. ♪
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haidi: a growing number of chinese factories have payment delays rising to record levels. it now takes 92 days to collect
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cash on completed sales. another day, another warning about a different aspect of chinese debt. how serious is this problem? >> it is the worst on record, now taking 92 days to collect receivables. compared with 10 years ago, this number doubled. this is the problem companies are facing right now. they do not have bargaining power with upstream companies, but downstream companies are asking them for longer. that is why their liquidity is under pressure. haidi: what are companies doing? >> there is a quick way to sell off those account receivables to a third-party, but they have to sell at a discount. we have seen more machinery companies doing that. sony heavy sold their receivables to a bank at a 9%
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discount. another machine maker started using this tool called factoring. because their receivables are rising again. the examples you give are these old economy companies doing poorly. will we see more of this? the liquiditye of crunch, companies will find ways to get cash back quickly because of the rising inefficiencies in the economy. a gauge we use. that gauge shows this inefficiency is at the worst in 15 years, so now it takes more financial resources for companies to generate the same amount of revenue because inventories takes a longer time to sell, then cash takes a longer time to collect. oft is why there are a lot headaches for companies right -- and bankrupt these
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bankruptcies are expected to rise 20% this year. haidi: thank you for that. why deutschecern, bank is casting a dark shadow over the markets. we have the shanghai open for you. this is bloomberg. ♪
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♪ haidi: the top stories trending this hour. concerns over deutsche bank's financial health a nerve investors in asia. drag,ials are the biggest futures on the s&p also indicating lower. bloomberg revealed some hedge funds have been cutting their exposure. japanese consumer prices falling for a sixth straight month.
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challengesres the the boj governor faces as he tries to get inflation to that 2% target. in tokyo,ing an event saying central banks face a range of challenge. s. rises ahead of its addition to a basket of reserve currencies. beijing is hoping for a boost in the usage and prestige of the currency. let's get ahead to the shanghai and hong kong open. sherri: everything in the red. and hang seng index joining the selloff. we are seeing wall street after that decline there, spilling over into asia.
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consumer goods and materials leading the selloff. sectors on the msci benchmark in the red. in china, we are also seeing investor sentiment being lower see hearing about the pbo might tighten monetary policy. c might tighten monetary policy. they are dialing back the expectations of more monetary stimulus in china because of soaring home prices and stabilization of the chinese economy. felt across asia, especially chinese stocks. we are expecting these stocks to move. .9%, sanctioned over money laundering safeguards. g electric vehicles falling
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more than 1%. li ka-shing has sold shares of the company. jianling motors also falling 1%. , up .9% now.ive we are also keeping an eye on japanese stocks. we are seeing the financial sector feeling the downward pull , 1.6% down. financials falling 1.9%. readyer they have are declined 30% this year. worstre headed for their annual performance since the global financial crisis. not surprising given that the negative interest
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not feelinge confident, leading to a selloff across japanese banks. the boj also speaking today keeping athey are close eye on the yield curve every time they have a policy meeting. certainly not helping sentiment, japan consumer prices falling in august. below the 2% target. there was a modest gain in industrial production, but household spending slumped. what is your take on these numbers? are they as bad as they look? is a somewhat gloomy picture for the japanese economy. the court consumer index figure percent, worse than expected, far away from the boj's target of more than 2%.
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one bright spot was industrial production, which rose, but that has been uneven. it fell last month, so it doesn't really add that much to the economic optimism. the first data released since the boj introduced its yield curve control regime. it sounds like everyone including the boj is still trying to work out how this works. >> i think what you're saying is right. it just seems that economic numbers like these, if they continue, the boj will not have any choice but to ease policy further. end int meeting will november. we will have to see what it is. some people are saying that negative rates will be cut that will get opposition from banks. isdi: the problematic yen
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one cause of the following consumer prices. will they do anything to try to stem this relentless yen strength we are seeing this year? >> that is a tough one. the recent boj stimulus has not succeeded in getting the yen to weaken. the ministry of finance could eventually intervene if they yen falls too much -- rises too much. our own survey shows that they yen is expected to weaken to 110 next year, so if that happens, japan will be better off, but we will have to see. haidi: that is going to be a huge unknown. deutsche bank's financial problems have oriole the u.s. markets and have spread to asia today.
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yorkenan has more from new on what is plaguing investors. bank,cerns about deutsche one of a trio of banks in the spotlight, commerzbank, wells fargo two others, wade on the market thursday, and continues to be a focus into friday trading, down is much as nine percent in the thursday session and has been under pressure since the u.s. justice 14artment requested a billion dollar payment to settle an investigation into the bank regarding residential mortgage-backed security's. deutsche bank says it expected to negotiate that lower, but a bloomberg report that at least 10 hedge funds have reduce their exposure to the bank, and that is the result of bloomberg news having access to an internal document at the bank that showed in the last week that these had moved their derivatives positions to other firms. it certainly raised or added to concerns about the bank stability. in terms of deutsche bank, it
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clients have an understanding of our stable financial position. one observer said it does not appear to be a serious problem at this point, but his concern is that it could be. take a listen. >> it probably isn't imminent. if you started to have a run and everybody started to pull the deposits from deutsche bank, then it becomes serious quickly. in a sense, it is an artificial crisis, but has the potential to become a real one. >> earlier today, wells fargo ceo was answering questions about the banks own scandal with accounts made for customers totally unaware they were being made, and commerzbank raise concerns, the combination of all three banks in the spotlight put pressure on bank stocks in the thursday session. checking on other stories we are following.
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divisions of the fed seem to be widening with one policy makers sing december may be the time to hike, while another flat-out disagrees. traders are seeing a 53% chance of a hike before the end of the year. the philadelphia fed president said it is time to get a move on. in i tend to be in the camp of normalizing sooner rather than later. i can't say there is dissent, doect the speed at which we accommodation, but nobody says we should do that quickly. has used hisew visit to mexico to deliver a pro-trade message and call for deeper cross-border relations, acknowledged and the stress caused by globalization, but says trade is still the best way to boost growth. fallen 11% over fears of a donald trump
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presidency damaging mexico's ties with his biggest trading partner. >> i think we have deep relationships here that we have put a lot of emphasis on deepening and developing, and i am here to speak about that. i think there is no question but that the u.s. and mexican economy are very much interconnected. you look at the number of people who go back-and-forth, the goods they go back and forth. to mexico as well. it is important for both of our countries to do well, important for us to do well together. haidi: the philippine president has confirmed a widening split with the u.s. saying he wants new ties with china and russia. he says the drills with the u.s. coming up will be the last, although the lines -- alliance will continue. he has had and an easy relationship with washington over his campaign of killing
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drug dealers. delhi -- saying islam a bad the nuclear armed neighbors have raised alert levels. a new report says the price tag for the tokyo olympics could top $30 billion. that would be a fourfold increase. the city won the race in 2013. the new governor has raise concerns about the potential burden on the city and its taxpayers. the report says that learning costs show a lack of leadership in the city's olympic team. and fewerhit movies discounts creating drama when it comes to china's movie market.
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is the big screen boom slowing? have we picked? is this the steady decline we are looking at? a classic indeed story where you have had booming growth year after year. the average over the past five years has been 30% growth in box office. eventually do do expect for things to level off. this is the second straight 16%, the decline, biggest quarterly decline we have on record. the data does not go back that far. it is a sign that the market is maturing. viewers are becoming more selective. there are also specific headwinds for year on year growth. they have been relying on opening new screens across the country. that is starting to level off. another affect they had last year when ticket sales jumped
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50% was that i a lot of mobile app makers were offering discounts for moviegoers to book online. that drew in a lot of viewers. the bottom line is analysts are telling us it is a lack of hit films. this year, the films that have been put on have not come off as well. had these ties between hollywood and china take place in the form of alliances, high-profile acquisitions, specialize, targeted content. does this mean it is the end of the romance? >> that is a good point. it has been very exciting. you have had a lot of the biggest chinese companies, everybody from alibaba getting into the streaming business, to wang jianlin and the one the group. into the movie business trying to get a hold of entertainment assets. at the same time, hollywood has
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had a love affair with china. that is where the growth and audience is. you have to think this decline in the size of china's movie audiences going to put a crimper on some of these deals that had come in at high premiums. bidding for studios is going on right now. is looking at dick clark's production house. at the same time, the audience is still huge in china. it is still the biggest growth area for hollywood, even though growth is slowing. still what they will be chasing after. there are more deals ahead. it you can bet on that. haidi: those demographics are formidable. thank you so much for that. the slowdown in china's movie market. a switch and policy from china's central bank.
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the latest private indication of how the country's manufacturing sector is holding up. this is bloomberg. ♪
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haidi: some breaking news out of china, the latest manufacturing at 50.1, banging on expectations. the manufacturing sector still holding ground. that marks the third love that the manufacturing gauge has stayed above that 50 level. after rate cuts, good the nextes, move be to tighten as early as next year? that is the view from a new
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bloomberg survey of economists. >> central banks everywhere always have that proverbial fork in the road. that is their job. that is what they get paid for. on the pmi ising for private sector companies. that it has been three months above 50 shows that there has been stabilization in the private sector, nonstate mostly. they have been stabilization. the argument is now that we have stabilization, we have had 11 months of the pbo see doing policy moves other than reverse other moves, aside from moving that benchmark rate. there could be some thought that there has been accommodative
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policy and cheap money pouring into property markets, rising the most in august in six years. chin chin up there has been acce policy and cheap money pouring into property 60% -- shenzhen of 60%. starting to be some thought that maybe they need to tighten rather than listen. let me bring you into the thoseerg terminal to see interest rate cuts and how they correlated with the slowdown in the chinese economy, but the slowdown has moderated, where is the cuts were steepen dramatic, six cuts, and the holding pattern we are in right now. c, fork-in-the-ro dilemma. dilemma more clichés, speed bombs, fork in the road. other things are
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economist saying? surveyed, thets key takeaways, 15 say a tightening policy will take over within three years, four said by next year, one said this year. also adding that the renminbi should bottom out. one last cliché, policy makers caught between a rock and a hard place. -- in a hard place. accommodative monetary stance, growth might be at risk. do your job pboc. we will get a quick check of the latest business flash headlines. has endured another day of acquisitions over the
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bank scandal. some are calling for the arrest and dismissal for the entire board of directors. coming.problem is it is not today. you think today is tough? it is coming. when the prosecutors get hold of you, you're going to have a lot of fun. >> i am fully accountable for all unethical sales practices in a retail banking business, and i am fully committed to fixing this issue, strengthening our culture, and taking the necessary steps and actions to restore our customers trust. samsung's pharmaceutical division has won permission to list. complex drugs known as biologics. samsung electronics slumped on
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the note 7 recall, expanding other operations will help the company to become less dependent on it smartphone business. is sealinging boeing a deal with qatar airways. the order would be valued at upwards of $6.7 billion. airlines usually negotiate discounts. if completed, the purchase would be boeings largest sale this year. next, find out why chocolate is being added to the diane's of some pampered all see capital. that is up next. this is bloomberg. ♪
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haidi: you are watching "trending business" live from hong kong. onare streaming in your mobile devices. a farm gives cattle chocolate to produce the best tasting meat. tell me about this. chocolate-fed cows sounds like a fantasy. >> it is a unique thing to do. the reason we do it is to produce beef with a unique flavor and wonderful characteristics, suite, nutty, and gives a unique eating experience. haidi: how much chocolate are we talking about? >> they are fed cap berry. it is part of a complete ration.
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they will eat up to two kilograms a day. haidi: is it a luxury product? is china one of the markets you anticipate? >> people in hong kong are this earning. they know high-end products. customers want something very unique, and this beef is the best beef on the market. haidi: capital futures have been but are your price is exempt from market fundamentals because it is a different take on beef? >> our product is a luxury product. we don't produce a lot. it is not a commodity-style product. still quiteon is small, so it is exclusive and a luxury product. been theat has reception of asian markets given that a number of them have been clamping down on luxury products? >> people always want great
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food. when people come into restaurants and see the beef on the menu, they will buy that and consistently say it is some of the best beef they have ever eaten. such a thing as feeding them too much? yes, there is. what we do is we work on what is called a slow growth technique. cattleital can't eat -- can't eat as much as they want, and we produce a much finer texture in the beef because they are not rushing the growth. they are happy cows because they get to eat chocolate as well. >> they are happy cows. haidi: as the hotel industry sees changes, why asia appears to be the driving force when it comes to growth. this is bloomberg. ♪
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♪ announcer: from our studios in new york city, this is "charlie rose." charlie: david petraeus is here. he commanded u.s. troops in iraq during the surge, and also led coalition forces in afghanistan. with the collapse of the cease-fire in syria, he has coalition forces ready to take mosul from isis. i am especially pleased to have general betray us -- general ra


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